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DIRECTIVE No. 30/2004/CT-TTg OF AUGUST 5, 2004 ON MEASURES TO CONTROL THE RISE OF MARKET PRICES IN THE IMMEDIATE FUTURE

Since the end of 2003, the import prices of numerous goods, supplies and raw materials have seen sudden rises and stand at high levels; the bird-flu had occurred on a large scale, causing serious damage to husbandry and adversely affecting production and people's life. The Government had taken different measures to limit the negative effects of the above-said situation, ensuring economic growth and stabilizing the people's life. However, as compared with last December and the past years, the consumption and service price indexes in the first 7 months of this year are quite high.

It is predicted that in the coming time the prices of major goods items on the world market which we have to import such as petroleum-originating products (petrol and oil, plastics, fertilizer,..), iron and steel,…continue to fluctuate. Crude oil prices on the world market are at high levels and fluctuating by the world's complicated political factors and demands for oil. Generally, the price fluctuation trend on the world market harbors many unpredictable factors. Therefore, the task of attaining the market price objectives set in the National Assembly's resolution is extremely difficult.

Nevertheless, in order to stabilize the macro-economy, contribute to developing the economy and stabilizing the people's life, we must strive hard to control the price rise in the coming time. To this end, the Prime Minister hereby provides the following instructions:

1. The application of measures to control the market price rise must be based on the following principles:

a/ Measures to control the price rise must be practical and appropriate in order to maintain macro-economic balances, boost economic growth, attract investment capital and reduce difficulties for the people in their life.

b/ Measures to control the price rise must be flexible and suitable to the market mechanism and international economic integration which becomes more and more extensive and intensive. We must not be rigid, wishful-thinking, or return to the price-subsidized management mechanism. And at the same time, we must consider the control of the price rise in the coming time a central task in the performance of tasks by the ministries, branches, localities and enterprises.

c/ Measures to control the price rise must be associated with the practice of thorough thrift in construction investment, production, business and consumption; especially to practice thrift in the State’s expenditures: expenditures on investment with the State budget capital source, the State’s credit capital source, capital sources of State enterprises, and regular budget expenditures.

d/ For a number of important goods and services with great impacts on production and social life as well as goods and services on the list of those with prices set by the State, if the world prices greatly fluctuate, the price adjustment must be made on the principle of harmoniously combining the interests. In case of necessity, the State may apply appropriate financial policies; while enterprises must take measures to improve technologies, save production and circulation costs, reduce costs of products, and raise their competitiveness and business efficiency.

2. The ministers, the heads of the ministerial-level agencies, the heads of the Government-attached agencies and the presidents of the provincial/municipal People's Committees must firmly grasp the above-said principles and base themselves on their respective functions and tasks to take measures to control the rise of prices under their respective management; and at the same time, concentrate efforts on directing the performance of the following tasks:

a/ The Ministry of Planning and Investment:

- To coordinate with the production-managing ministries and branches in closely monitoring the production and business situation, ensuring major economic balances of the national economy.

- To review large projects in order to ensure investment efficiency. In August of 2004, to submit to the Prime Minister the list of State capital-funded projects which need to be postponed or slowed down, and the inefficient and unnecessary investment projects shall be suspended. To concentrate investment capital on projects which can be commissioned soon and yield high efficiency. To take measures to use immediately and efficiently investment capital sources already mobilized from Government bonds and other forms of mobilizing capital from people.

b/ The Ministry of Finance:

- To take measures to closely manage the State budget expenditures according to prescribed regimes, to resolutely cut unreasonable regular expenditures. To reduce by 10% the annual State budget regular expenditures. To take specific measures to promote and raise the efficiency of thrift practice and wastefulness combat in management and consumption of petrol and oil and energy, first of all in State budget-using agencies and units as instructed by the Prime Minister.

- To coordinate with the Ministry of Trade and the Ministry of Planning and Investment in closely monitoring market price fluctuations and make timely forecasts; to pay special attention to import goods being major raw materials in order to forecast the situation and propose the application of financial instruments such as taxes, charges, fees, State reserves and budget, and other appropriate measures in order to balance supply and demand for essential goods and supplies.

- To coordinate with the concerned ministries and agencies in controlling the constituent factors of important and essential goods' and supplies' prices controlled by the State; inspect and strictly handle individuals and enterprises that abuse the current situation to illegally raise prices of goods produced and/or services provided by themselves. To employ tax, charge and administrative instruments to regulate unlawful incomes, not to permit enterprises to arbitrarily raise prices, thus causing damage to consumers' interests, strictly according to law provisions on State management over prices.

- To continue to flexibly and cautiously apply financial policies in order to contribute to stabilizing prices of important and essential goods items, while ensuring the observance of international commitments.

c/ The State Bank of Vietnam:

- To continue to apply cautious, flexible and active solutions to administer monetary policies; to closely control currencies in order to achieve the objectives of stabilizing prices and interest rates, contribute to inflation control and economic growth; to cautiously administer and flexibly regulate exchange rates according to foreign-currency supply and demand on the market and the State’s foreign exchange policies, not letting sudden changes occur.

- To direct commercial banks and intensify measures to closely control credit activities, ensuring safe, efficient and sustainable credit extension.

d/ The Ministry of Industry and the Ministry of Construction shall direct Vietnam Coal Corporation, Vietnam Electricity Corporation and Vietnam Cement Corporation to strictly implement the Prime Minister’s direction on management of prices of electricity, coal and cement. Enterprises must strive hard to reduce production and circulation costs, especially fuel costs, raise labor productivity, renew technologies for reduction of product costs, eliminate the rise of input prices, control the rise of output prices, and contribute to stabilizing the market prices.

e/ The Ministry of Transport and the presidents of the provincial/municipal People’s Committees shall, within the ambit of their respective powers, direct the State-run transport enterprises to stably maintain inland road, railway, riverway and airway transport freight.

f/ The Ministry of Post and Telecommunications shall, from now till the end of 2004, reduce channel-hire charges and connection charges in order to keep Vietnam's telecommunication and Internet charges lower than or equivalent to the region's average.

g/ The Ministry of Agriculture and Rural Development:

- To assume the prime responsibility for, and coordinate with the ministries and localities in, taking resolute measures to restore poultry flocks right in 2004 and prevent and combat the bird-flu, not letting it reoccur on a large scale; to reorganize the production in the livestock feed-manufacturing sector, including the system of sale agents, ensuring the reduction of feed production and processing costs, contributing to reducing prices of livestock feed and boosting husbandry development.

- To coordinate with the People's Committees of Mekong River delta provinces in examining and grasping the volume of commodity rice of the 2003-2004 crop and the volume of food left in enterprises' stocks for export control. To maintain the 2004 export rice volume at a reasonable level, ensuring food security and stabilization of domestic prices of paddy and rice.

h/ The Ministry of Trade:

- To assume the prime responsibility for, and coordinate with the concerned ministries and agencies in, monitoring and forecasting market changes, regulating goods supply and demand, not permitting limited imbalance which causes the rise of prices of goods, especially sensitive goods on the market such as rice, petrol and oil, iron and steel, fertilizer, cement, sugar, paper,… Any arising supply-demand imbalance must be promptly reported to the Prime Minister for appropriate handling measures.

- To proceed with studying and elaborating reasonable rice export strategies in order to ensure peasants' interests. To coordinate with Vietnam Food Association in reviewing the signed contracts, closely monitoring the situation of food prices on the domestic market in order to administer it, preventing the massive and concentrated purchase of paddy and rice at a given time, which push up the domestic prices of paddy and rice. To examine and reorganize the cross-border non-quota export of rice. In the immediate future, to permit the export of a maximum of 3.5 million tons of rice for the whole year 2004, which may be adjusted only in the 4th quarter of this year.

i/ The Ministry of Industry shall assume the prime responsibility for, and coordinate with the Ministry of Trade in, directing Vietnam Steel Corporation and Vietnam Steel Association to complete in August 2004 the steel supply system, enhance the market-administering and -managing capability, prevent speculation, monopoly and associated monopoly over steel prices; to soon promulgate the regulation on administering the domestic steel market applicable to both State enterprises and enterprises of other economic sectors as directed by the Prime Minister. To direct Vietnam Steel Corporation to soon establish the system of steel business agents and networks in order to ensure the objectives of stabilizing steel prices, not abusing the adjustment of tax rates to raise steel prices and illegally associate among manufacturers and distributors for arbitrary raising of steel prices; to examine and take measures to handle enterprises which fail to observe the regulations on steel circulation.

j/ The Ministry of Health shall take resolute measures to stabilize the medicine price market, especially essential preventive and curative medicines for human use, ensuring that these medicines' prices shall not suddenly rise; to assume the prime responsibility for, and coordinate with the concerned ministries and agencies in, completing in August 2004 the scheme on "enhancing the State management over pharmacy" for submission to the Government for approval, and implementing the scheme after it is approved, thus contributing to perfecting the medicine supply system, enhancing the market-administering and -managing capability, preventing speculation, monopoly and associated monopoly over medicine prices; examine and take measures to handle enterprises which fail to observe the regulations on medicine circulation.

k/ The Ministry of Culture and Information shall coordinate with the Central Committee for Ideology and Culture in directing mass media agencies to coordinate with the concerned ministries and agencies in well performing the propagation for enterprises and consumers to be aware of the State's administration of prices, relations between domestic and foreign market prices in integration, thereby preventing the psychological impacts in pushing the prices high.

l/ The General Department of Statistics shall re-determine the structure of goods and service categories in the "basket" of goods subject to calculation of consumer goods and service price indexes, calculate and publicize inflation indexes according to GDP in line with international practices.

m/ The People’s Committees of the provinces and centrally-run cities:

- To stabilize charges for passenger transport by bus in cities, provincial towns and industrial zones.

- To direct the concerned provincial/municipal Services, Departments and branches in taking measures to control factors which form prices of supplies and goods with abnormal fluctuations, control prices set by enterprises which abuse the current price situation, especially the rising prices of petrol and oil, to illegally raise prices of goods produced and/or services provided by themselves. To regularly inspect, examine and handle acts of violating the State’s regulations on prices, not permitting enterprises to arbitrarily raise prices, thus causing damage to consumers' interests.

3. For goods and services on the list of those subject to price stabilization prescribed in the Government's Decree No. 170/2003/ND-CP of December 25, 2003, the ministries, branches, localities and enterprises must closely monitor the situation of market prices and perform the work of price stabilization strictly according to the Government's regulations.

4. The ministries, branches, localities, enterprises, agencies, socio-political organizations, armed forces and consumers should strictly follow the Party's and State's undertakings on thrift practice; take specific and practical measures to practice thrift, combat wastefulness and raise efficiency in production and consumption.

5. The Ministry of Planning and Investment shall assume the prime responsibility for, and coordinate with the Ministry of Finance in, monitoring the implementation of this Directive, and monthly, synthesize and report on implementation results to the Government. From now on, the monthly and quarterly socio-economic situation reports, presented to the Government by the Ministry of Planning and Investment, must include the results of implementation of this Directive.

6. The ministers, the heads of the ministerial-level agencies, the heads of the Government-attached agencies, the presidents of the People's Committees of the provinces and centrally-run cities, the heads of the State budget-using organizations, the chairmen of the Managing Boards, the general directors and directors of State enterprises shall have to organize the implementation of this Directive.

Prime Minister
PHAN VAN KHAI